Investing seems to be dominating again. How the DAO is becoming an amazing investment vehicle (again)
Spring of 2016, the world is witnessing a very sharp boom in the crypto space. Thousands of projects around the world are coming up with their revolutionary ideas and attracting millions of investments. One such project is The DAO.
All researchers and creators of DAO projects seem to know the story. The pioneer of decentralized organizations, which raised over $150 million, was hacked at one point and lost everything. Collapsing not only its contributors, but also an entire industry. For a while, though.
DAOs have proven their effectiveness and are becoming an increasingly popular mechanism for cooperation between people around the world. And also, return their power in the field of investment mechanisms. Over the last couple of years, a number of DAO projects have emerged that surprise and demonstrate that the future of investment is DAO. In this article we will review them and try to understand why this mechanism is so convenient for investing.
How the "investment DAO" works
First, it should be defined that "investing" is a very diverse concept. In this article, we will focus more on two types of investing: venture capital investing (for the startup ecosystem) and "classical" investing, which involves investing in items, real estate, and the like.
First, let's look at how DAO investing can work in the startup ecosystem.
Traditionally, startups have raised money from funds and angel investors. While these methods of fundraising are still prevalent, DAOs provide an alternative. It will be enough for the project to create its own token. And here we come back to the previous point - the community.
Now you don't need to raise a round from one or two funds. You have hundreds, thousands, tens of thousands of investors owning your token, all over the world. And each can help/influence and advise based on a relatively simple principle of direct democracy.
This mechanism is called treasury. And it can be filled in different ways. In addition to the aforementioned sale of tokens, it can also be the issuance of NFTs.
Startups that have a DAO-treasury can fund their development without the need for traditional fundraising. The community can vote on how the funds are allocated, ensuring that the startup is meeting the needs of its users. This eliminates the need for a central authority, such as a board of directors, and provides a transparent and decentralized funding process.
What about classical investing?
To understand how this works, let's break down a few case studies:
#BuyTheBroncos
Buying a sports club is a very complicated business. Especially if it is a huge brand worth several billion dollars. For example, the owners of Manchester United for half a year can not decide on their buyers, constantly raising the price: then to 5$ billion, and now up to $6.
However, it should be understood that the greatest value of the club is the fans. And when they want to "turn the game around," they do. That's exactly what fans of the NFL's Denver Broncos thought, as they created the DAO to buy the club for more than $4 billion.
The campaign, called #BuyTheBroncos, launched in February 2022 and aims to set a historical precedent for buying a sports team with funds raised by the crypto investor community.
The story isn't over yet, the Broncos still haven't been bought. However, #BuyTheBroncos demonstrates that cryptocurrency communities are eager to innovate and apply technological advancements in various fields. It shows how crypto investors are actively looking for ways to use their digital assets not only to invest, but also to realize ambitious and socially relevant projects.
Tungsten cube
An unnamed DAO group has raised $250,000 to purchase a huge tungsten cube. The cube weighs practically a ton and the purpose of its purchase is... um, not entirely clear. According to sources, the investors are using the precious metal as a collector's item and a place of pilgrimage.
Each investor is given a special NFT that guarantees the ability to touch the cube once a year.
The logical question is what is this for? Actually, it just looks like a meme. However, it demonstrates the power of digital finance and DAOs - people can do what they want with their assets. This is one of the main tenets of crypto - freedom.
Spice DAO are a bit of fools
This example demonstrates rather how not to invest with DAOs. Spice DAO purchased the original copy of the 1975 book "Dune" for $3 million dollars. The price was about 100 times the market value of the artifact. This begs the question - "Why?"
Spice DAO originally planned to make the book available to the public, but ran into the fact that it was already in the public domain. Afterward, the company contacted many directors and animators to create an animated version of the book.
However, this is legally impossible. The law firm Thorntons Law denied that Spice Dao could produce any series without the permission of Herbert Publishing, "Spice DAO would have to get licenses from Herbert Publishing, not just buy the book. You can't make a Batman movie by buying a Batman comic book."
Conclusion
DAO continues to evolve and become an increasingly flexible system that allows people to come together for interests, goals and to achieve global projects.
The examples above, although rather meme-like, demonstrate the power of a group of people. At the very least - in fundraising and its management.
It seems that the collapse of the "pioneer" The DAO has been successfully passed and now remains forever on the shelves of digital history.